Buying land stays consistent across the country - Ronnie Richardson

[Paul Yeager]  

Hi, this is Paul Yeager This is the MtoM Show podcast, a production of Iowa PBS and the Market to Market TV show. Land. It's been featured many times on this podcast, we've talked about land sales, who's owning land, who's buying land. Today, we're gonna get into strategies about the buying, selling and what to do with some of the money specifically on capital gains. We're going to talk about a DST - going to leave it at that - that's the tease, you're going to want to find out what that is. What are some scenarios if you say want to buy that section, and you live here or back there? What are your options? What should you do? Say there's four of you in a family? None of you are any more involved in the farm. Maybe one of you is again, we'll talk about those scenarios. Our guest today is Ronnie Richardson. He is with the National Land Realty company. He's based in Mississippi. So he has perspective from outside the Corn Belt. When we find out how similar ag land is, across the country, he's been doing this since the mid 90s. Buying and selling land. We're going to discuss some strategies and hopefully help you out as you try to make a plan in your family. Yes, we know money and politics and religion are all things you shouldn't talk about. But maybe this is something you should talk about with your siblings. That's today's episode of The MToM show podcast. Any feedback for me, hit me up on email Paul.Yeager@IowaPBS.org. I always get caught talking sports but is Dak Prescott winning on Monday Night Football a big deal for you?

[Ronnie Richardson]  You know what? My daughter lives in Dallas anyway. So we're Cowboys fans. And that and I went to Mississippi State and got out a long time ago. But that was a quarterback there of course after I left and so yes, we're back fans and we're Cowboys fans and we're Alabama fans. My daughter went to Alabama and worked for Nick Saban for four years. So we're SEC, Alabama Mississippi State. They're Alabama fanatics. I'm just a Mississippi State fan.

[Yeager] Fair enough. So we don't talk the week of the game whenever that the schedules line up with Mississippi State and Alabama might play.

[Richardson] You know, when Texas A&M was whipping on Alabama, a couple years in a row. I had to go outside during that game several times because it was so contentious there because I'm a Johnny Manziel fan and Johnny Manziel was hollering for Texas A&M And it didn't go well. Because there really are, they're crazy about Alabama. 

[Yeager] Johnny Manziel that's a whole another discussion. We could get into Ronnie about not studying the playbook and not looking at film when he got to the NFL. But studying is something so you said you went to Mississippi State. What else is your background there?

[Richardson] When I got out of Mississippi State I had a degree in marketing and then went to Mississippi College at night school for three years and got a master's degree in business with an emphasis in federal taxation. After that, in 1991, I bought a piece of property for I think I made $5,000 on it in seven days. And I said this is for me, this is what I'm gonna do the rest of my life is being the real estate business and, and I went to work for the land guy that a guy in Mississippi that was known as the land guy. And in 1995, I opened my own company and decided I was just going to make a living selling land. And I didn't really have a mentor, I didn't really have a lot of training, I just went to the school of hard knocks when you start talking about land brokerage and just figured it out.

[Yeager] You sit in Mississippi right now. So tell me Is that where you started then, to? Yes, right in '95? Give me the story of 1995 when you start. What's the scenario of land ownership, who's owning land? What do you get yourself into that is different then today?

[Richardson] In 1995, some of the mostly what we were selling was recreational land here in Mississippi, which is a 200 acre hardwood tract or pine tract that a guy is going to build little cabin on and that says we can get away and we were selling that land for $250 an acre. And you know, even at that time, people would call the office and say $250 An acre? Is it gold under it or something and then you'd have to you'd have to deflect that and, you know, but then then all the people that bought in that period, you know, they're they're looking like smartest people in the world in today's world. Because now even a recreational tract here in Mississippi, it'd be three, $4,000 an acre, same tract of land that was $250 an acre in 1995. And you know, we just went through the struggles of owning a real estate but brokerage, sometimes you're it's feast or famine, sometimes you'd have more money than you think you're ever going to spend. And other times you live in your truck, because you can't pay the rent, you know? And so, it is, it was it's been a struggle, and I learned a whole lot. And I didn't have nobody to pick me up. And we were down and it and that worked out. I mean, you just, it's, it's the thing I would say to people is this is not easy, it looks easy. It looks easy when we're riding around in a truck and we're dragging a four wheeler around, they think is fun to ride into the bean field and showing a guy a farm or something. But it's work. And if you answer your phone and you take care of your customers, before you know what, you'll start getting referrals. And that's what happened in 1995, 6, 7. You know, in life goes along good. And all of a sudden, you look up in 2007 hits in 2008 hits, and then you realize why everybody's not in the real estate business.

[Yeager] That's when the ‘sleeping in the truck’ was more of a possibility.

[Richardson] It was more of a reality. Yeah.

[Yeager] What was the customer like in '95 compared to today? Is it the same type of person?

[Richardson] it's the same type of person are, you know, our bread and butter person that we make a living off of as a self employed guy, business owner, that can spend, you know, half million to a million dollars in the recreational side of life? On the farm side of life, you know, institutional buyers are more violent than than neighbors are more than somebody wanting to get into farming. Because with prices today in the farmland industry, it is tough to break into that. I mean, you can't buy, you can't pay $20,000 an acre and farm your way out. You can't do it. It's not $20,000 In Mississippi, but in Iowa where you are it certainly is.

[Yeager] Well, I guess that's always a constant email or question that we get on Market to Market is no beginning farmer can get in at these prices. So you agree that that is a true statement? It's hard for someone with zero capital or zero whatever to get into agriculture, that's true. Not that's not just an Iowa-Illinois-Minnesota thing?

[Richardson] No, that's absolutely not an Illinois Minnesota thing. It's a Mississippi thing because land in Mississippi, let's just say it's $7,500 an acre. Well, take the guy that gets out of Mississippi State with a ag degree and wants to be a farmer. I mean, he has no money unless he has some major league backing or he inherited the farm. It is impossible to buy 1000 acres and, and farm beans or rice or corn on it and form your way out of it. Especially in today's world with the interest rates. I mean, you think about boring, you know a couple million dollars at 8%. You're talking about $160,000 A year interest carry. And then he has to then you've got to have equipment and see all the stuff that it takes.

[Yeager] It doesn't get cheaper anywhere. Because that's what you're saying, that it doesn't pencil out differently for different crops or different regions. Okay, so I'm asking you about the client. What’s the difference? When you say it's the same person who buys the 200 that's got all the nice trees that they build a cabin, that person's still existing? Are they different in the sense of they look at that hunting cabin or weekend cabin as a weekend and a hunting? Or is that an investment for them that might just happen to serve as a hunting and fishing base.

[Richardson] Paul, we try to encourage them to call it an investment. More than anything else. Let's hold this, let's grow the timber. Let's sign up for the government program on the CRP if we can put 50 acres in CRP. Let's manage it as an investment because what we've seen is the land prices continue to increase just in line with inflation and so why would you not want to maximize that asset in your portfolio? Now you still go to get to go out there and enjoy them weekend of course.

[Yeager] Right. You mentioned '07, '08, '09. Are we repeating those years right now?

[Richardson] I don't think so. I don't see it. Commodity prices. The futures for the spring look good. There were so much money that was printed during COVID We're gonna see some inflation but I don't think we're gonna see what we saw in oh seven and oh eight. We're not gearing up for that. We don't anticipate that.

[Yeager] How well in '06, '05 could you see what was happening in '07, '08? Did you have that breath, looking, turning every page go on Is today the day?

[Richardson] In '07, I did see that because the Feds were raising a quarter a quarter, and they would not stop. And I know this because I had a huge loan, I was building a big building in Pensacola, Florida. And when I got done, I had about $35 million borrowed and it was 10.75% interest. And so you can count the interest daily. And that's Sunday, too. I mean, you can I didn't sleep the whole summer of 2007, hoping. But I mean, I could see that accelerated inflation, I mean, accelerated increase in interest rates that were just going way too fast. But I don't see that now. This looks like it's more calculated.

[Yeager] However, let's accelerate this a moment. What if, in 2023, we still see another interest rate? What if we get into early 2024? And another rate hike? Then what do you think? And

[Richardson] I was interviewed with another company not long ago, and we talked about historical highs as the interviewer was talking about where it historical highs and interest rates? And the answer is no, we're not. We're at historical normals. We've been at historical lows is what makes it look like it's, it's off the chart, but it's not off the chart. It's okay, right now, the answer is right right now is okay. It's not okay. If you owe a bunch of money. And your client, your you're, your people that are watching this are going on Mississippi's nuts, I'm paying eight and a half percent. Well, that's just talk to.

[Yeager] Talk to those from the 70s and ask them if they would take eight, nine, 10%. Right. Right. And that's where we have some analysts that she admits she has maybe done it a couple of years. And she says, and it's hard for her to admit when maybe one political administration is not necessarily the fault or the cause of the problem. To say no, historically, this is still okay. So that's that you don't have to answer that, Ronnie. That's politics.

[Richardson] that's how we feel it, national land that historically were okay. So we're gonna keep moving in that direction.

[Yeager] I want to go to farmland for just a minute on who's buying. We've heard from different podcasts interviews I've done here. And in other episodes of the show, I've talked to land people, who is buying the land. I'm not even going to give you an A, B or C but Who's Buying farmland that you're seeing across the United States right now?

[Richardson] If it's if it's a big tracts of farmland and be an institutional buyers only person is going to be able to stay in that. If it's a quarter section comes up. And Choctaw County, Iowa or Minnesota, it'll be a local buyer. Usually it'll be a local guy, usually the neighbor or bought but if the neighbor doesn't have a lot of money and what he's already farming, he can, he can cost average that and be fine. So that's who we see, buying a medium sized piece of property is a guy that has maybe inherited some money and wants to park it somewhere, wants to sit it and let it sit as an investment depends on what kind of return he can get. I don't really know what the rights are the rental rates and our but let's say a guy buys a quarter section for $10,000 an acre. Well, if he can get $300 an acre rent on that. I mean, that's roughly 3% return on his money, not bad and he's hedging on the inflationary part of the farmland. It's not bad, not bad. So that guy still buys.

[Yeager] Are you seeing it’s maybe when you say guy, somebody north of 60, north of 70. Someone on the older side?

[Richardson] You know, I just did another interview with another company. And we were talking about the average age of a farmer and today's world and the average age of a farmer is 60 years old right now in the United States. And so is that guy still buying? The answer's yes. If it's close to it gets back to that old saying I don't want to buy the whole world. I just want to buy everything that touches me. And that's the way farmers look at it. And they usually can. Again, if they got if a guy's got a whole section and a quarter section comes up behind him and he has to overpay for it. He will.

[Yeager] He can because it cuts down on transportation. It cuts on those costs. And they know who their neighbor is, and they know who their neighbor is. Okay, so this is a picture behind me of my home farm in Buchanan County, Iowa. Right next to it. I'm trying to think here I got a look. We actually were looking over the from where this image is taken was up for auction two weeks ago. It went for $16,700 about about 251 acres, two different sections at 16.7. My understanding is there were four bidders, one on one virtual, three within four miles of the piece of land. So I mean, that's my only anecdote of a recent time. Now I'm gonna get political on Ronnie for just a minute. Okay, there's a push in legislatures and in discussions in the national in Congress about who can own farmland, there's this concern about foreign owners on land. What have you seen in that arena?

[Richardson] I've been contacted by both Russians and, and Chinese to look at farmland. You know, it's so what do you do? You know, my heart says, I'm an American, and this is our land. And I want to grow our food here for generations to come. But, you know, what do you say when a guy calls up and says, I want to spend $100 million on farmland in the United States, and it's not against the law? So do you say, Paul, do you say, Well, I'm not willing to sell you that? Great, thank you. I'll call the next guy. Have a nice day, click. Have I sold? Any of it? No, I have not. We have not sold any of it to any foreign nationals? As far as I know, never.

[Yeager] But you've had you've taken phone calls is what you're saying. 

[Richardson] I've taken them in my vehicle and looked at multiple times. And they didn't, you know, it's always difficult. It's a different culture. The Chinese are different culture and the Russians are different culture. So it's not that we had communication problems. It's just they just couldn't get the deal done.

[Yeager] Do you? Have you given rides to Canadians and Mexicans and those from the United Kingdom or at least their interests? Because percentage, that's who's the biggest ownership in foreign foreign ownership of US Farmland.

[Richardson] Argentines. Okay. But I have not had any. I have not had anybody from Canada or from the United Kingdom show up?

[Yeager] No, we have. Yeah. Do you think that politically that's an issue that you hear about and will continue?

[Richardson] I think it is. And I think we will continue to hear about it. And I don't know that I don't have the answer. I don't know how to fix it. If they passed legislation that made a foreign national, limited the amount of farmland or land that they could own, it would not. It wouldn't upset me. I mean, if they said, you know, if it was reasonable, and I don't know that it would upset a lot of people.

[Yeager] Is there a certain farm policy, Farm Bill policy or anything that you're watching in Washington that's impacting what you do on a day to day basis right now?

[Richardson] No, the thing I was watching that I heard some scuttlebutt about was the limitations on 1031 exchanges. On the capital gains, part of that I watched that pretty close. But I don't care what side of the aisle you sit on. All those politicians love money. So I think that was just lip service, to try to appease the voter, but I don't believe they're going to. I don't believe they're going to change the limits on the 1031 capital gains deferment.

[Yeager] And does that also, do you also call that I'm sorry, not you. But is that also the name that sometimes gets the death tax? No, no different things, right. Different things?

[Richardson] Yeah. The death tax, of course, is estate tax that happens when you do die. And then the limits of that are perpetually changing. I think right now a married couple has the first $22 million of a married couple is not is not taxed. But once you go north of that the tax rate on that death tax is 50%.

[Yeager] Well, you're not hearing that necessarily, that's going to get addressed or changed, or it's beyond lip service.

[Richardson] Paul, I have not heard that. Okay.

[Yeager] Well, you're in it. You're in an industry you're you've got your ear to it closer than I so that's what I asked. Ronnie, but let's talk about that husband and wife that may have she's connected with land. There's the 250 next door and they want to buy it, but they're not on the farm. What's your best advice for them right now?

[Richardson] My best advice to them would be to look at it purely as an investment and no different than looking at buying a building and leasing into Waffle House, or Dollar General or Walmart or whatever. It's a, you know, what is my return on my investment. That's what they need to look at. As if I buy this farm for $16,000 an acre, and I rent it for $320 An acre a year, that's a 2% return on my money. And hopefully that $16,000 increases through inflation, and appreciation. You know, hopefully, it's increasing at a rate of four or 5% a year. So you take the five, let's just say five for easy math, lands appreciating it five, they're getting a 2% return on their investment is seven. That's a fair investment. That's what I would tell them. And if they found a better investment, if they wanted cash and put it in the money market, you make 5% of the money market.

[Yeager] Yeah, most of the time, most of the most of the time, right? Let's reverse it. Let's go with the family that sold the 250 for 16.7. The trust that's left or the one 85, 75, 65 year old person, that's seven states away that doesn't have any interest to this land, never been there, never seen it. They come in to you and say, Ronnie, it's time to sell but we bought this 50 years ago. What are my options, Ronnie?

[Richardson] That's the very first thing I asked them is, what's your basis in this property? What are you going to do with the money? And about eight out of 10 times the landowner will say are your real estate broker? Are you an investment advisor? or you, what exactly are you? And you know, some of them say it's none of your business what I'm going to do with the money, but what I what I would say to those people that sold that farm is, you know, this is generational money, you're talking about 250 acres, you're talking about 20 Something million dollars, I sell that thing for if, if you will, if you don't exercise the 1031 IRS code, we can sell this farm, you have no basis you bought it 50 years ago, you're gonna owe a third of your money in capital gains tax that's due next year. If you'll apply the 1031 code, we can move 100% of these funds into another investment. That's income producing that's appreciating this real estate that is not manageable by you. So let's take a guy that is 75 years old and his children don't care about the farm, they don't want to hear about the farm. They don't want nothing to do with the farm making a 2% return on their money. We can sell the farm and move the funds to another real estate asset. They can make a 4% 5% return on that money. It's paid monthly and the assets appreciating whether it's a and there's a million things you can move that money into. There's actually farmland Delaware Statutory Trust where if you didn't want to be a single tenant owner or single landowner on it by yourself, you could sell that farm 1031 That money into multiple other farms and on a partial interest in multiple other farms and make a return on your money. If you were attached to the land. But there's 1000 assets you can put that you can move that money into.

[Yeager] Give me, I don't know about this, Delaware? What is it a Delaware State trust? Delaware Statutory Trust? Where did this come from? And what is it?

[Richardson] Well, it originated in the state of Delaware, of course. And basically what it does is it lets you use the 1031 IRS code to move from one asset to another asset class. So if you say let's say you own an investment piece of property, let's say it's 200 acres of recreational land, the trees are growing. You deer hunted on it and you had it and had appreciated from $200,000 to $400,000. And you get ready to sell it. Well. Now you got a $200,000 capital gain. You could take the $400,000 and invest it into something that's qualified as a Delaware Statutory Trust. It'd be a multifamily apartment building in Baltimore, Maryland. It'd be a student housing facility at North Carolina State. Maybe it's a Amazon distribution center in Austin, Texas. Maybe it's a medical office facility in Memphis, Tennessee. You could buy 100,000, you could put $100,000 in four different assets if that's what you, that's what you like. You get to look at a lot of assets. Maybe you put $100,000 in a Delaware Statutory Trust farmland property in Iowa. So you own $100,000 in farmland, and you own student housing, and then you, you owe zero capital gains, you defer that capital gains exposure until you take the money. So you made $200,000, you put it up for the next generation, and you might make a dividend off of it every month. And that dividend varies depending on the asset. Some of them pay more than others, it depends on the performance of the asset. For example, these Amazon distribution centers have fixed rates, you know, which, you know what you're gonna make, they're locked in for 20 years at X number of dollars. The multifamily housing stuff, it fluctuates a little bit based on the market. That's the best hedge I found against inflation.

[Yeager] So how old of a concept is this?

[Richardson] is probably been around for 20 years. And there's there's a couple different companies that have kind of the market share on it, that we represent that we go through. And the assets change on a regular basis, probably monthly, we get a new asset in our asset in our inventory, and start showing it to clients.

[Yeager] Do you find that where did that come from? Was that a government thing? Was that a private industry that then was allowed to continue and had some tax credit or not tax credit, but tax assistance with code?

[Richardson] It's a private industry.  You take a company like Passco, it'll go out, and it may, it'll find like a student housing facility in North Carolina State, maybe this brand new? Well, they'll buy it, and then they'll put professional management on it and run it, run it like it, professional managed, multifamily property should be run. And then at some point in the future, they'll sell that asset and move to a newer one or another one.

[Yeager] Okay, yeah, that's, uh, so the market was allowed to work in that scenario.

[Richardson] The market is allowed to work. Yes. And it's for hands off, for hands off management. It's the best thing I've been able to find that, you know, they're never gonna call me from the Amazon distribution center in Austin, Texas, and go Hey, Ronnie, the roof leaking, they're never gonna do that. Nobody else is gonna man.

[Yeager] You'll take other calls, not that one. You don't have to take it. All right, as other avenues that you think that have potential let's use the second scenario that I said of the family. There's four siblings. So that's an equal easy math situation there that they can split. I saw yesterday, just something on X, Twitter, whatever you want to call it about different scenarios of playing out the old way: a quarter, a quarter, a quarter a quarter. But then there was one of those 25% Was someone actively engaged in the farm? Have you seen scenarios or help me? Is there a scenario that can be fair, but yet helpful to the person who is on the farm because sometimes everybody's equal, all kids are created equal in the eyes of the IRS. But in that scenario, have you seen some creative ways to allow the one of the four that's still active in farming?

[Richardson] What I have seen is, is the one of the four wants to continue to farm, you have to run it like a business, even though it's your sister and your brother, that have moved to Orlando and to Baltimore. They want to rent the farm. So they rent it to you at fair market value, if that's what you want. If you want to continue to farm you have to rent that farm from your family. That's the only thing that makes sense. Because what will happen is the the sister that moved to Orlando, if you're renting the farm to your brother in Iowa for $100 An acre a year, you know, that's way below market value. And eventually it's going to start eating on her that she's losing money. Because now she's aging and her kids are going well if I could just sell the farm or if we could get some more money out of the farm. Then she starts squeezing brother and it causes infighting, but if he rents it at fair market value, then everybody's everybody's good. Now what happens is one of the siblings decide they want the money out of it, not just the rent, and that's when that's when things start not going well. And you try to get everybody you see families torn apart over over quarter section and it's like this is your Family, are you crazy?

[Yeager] Do you see where something like that happens? Three are good with the one farming. The fourth one's out? Did the other two have to? Do you see what's the best case scenario in that situation,

[Richardson] if the other three are okay with it, and they and they have financial wherewithal, they usually just take the third person, take the fourth person out, just give the fourth person their money, maybe, you know, leverage the farm by the fourth person out, continue to rent it to your and then everybody goes on goes along happy. It's hard for people to agree that today's Tuesday.

[Yeager] Or that ice cream is good. You know, I'm lactose intolerant? How dare you say that? Yeah. But you know, when you get into that financial wherewithal, or you get maybe the kids have one sibling. So now we're talking a third generation away from the original owner, who might start chirping and saying, Mom, you're equal to what your brother has been doing. He owes us. Well, does he? But yeah, so in that scenario, is it, I might get myself in trouble at Thanksgiving. Should everybody just sell and start from scratch, put it out in the market, and let the auction do what the auction does.

[Richardson] It's not a bad idea. And then everybody divvy up the money, invest their money wherever they want, invest it by their capital gains and do a DST whatever they want to do with their money, because it's theirs and move along. That's not a bad, that's not a bad scenario. Usually what happens is the guy that owns this farm in the property, whether he be the cousin or whether he be the brother, or whatever, he usually is the one that's going to end up not happy.

[Yeager] Yeah, and the sister and the sister might be the one on the farm with the husband who's not blood and you run into then there's a whole nother scenario. All right. This might be a little bit out of this might make you squirm a little bit in the chair like I haven't done it enough, Ronnie, long term land remote ownership, someone who's seven states away from that 250 Is that good for the community? Is that good for agriculture, when that type of thing happens, at least it's consistent ownership. But is that good for that town? And the industry of agriculture?

[Richardson] You know what I would say about that, Paul is if you're seven states away, and you're owning property, you need to have a professional land management company managing that farm, you're gonna pay them some money, but they need to be maximizing that asset they need to look at it just like any other asset, hire somebody to manage it, because there's always something going on with a farm. Right now it's solar when then its power line easement and there's a pipeline wants to come through and somebody needs to be managing that for you. Does it hurt the community that the owner of the farm is seven states away? I think no. I think that farm is gonna be a farm in Iowa, that farm is gonna be a farm forever. Is what is not assay forever. It's gonna be a farm for a long time, no matter who owns it. Yeah, in Mississippi, it's a little bit different. Because you can, you can move that farmland into a CRP easement or WR P easement, and then it becomes a recreational track instead of farmland. Look when they cleaned up Mississippi when Teddy Roosevelt was down here hunting buyers and they started cleaning this land up, and dynamite and those big hardwood stumps out of the farmland and now you go through the Delta and Mississippi. And it's all about 10 year old hardwood trees planted back through some government program. Don't you know those old timers are like what it took me forever to get those stumps out. But in Iowa, it's gonna be a farm forever.

[Yeager]  Yeah, but you bring up the whole power, the solar, the pipeline. We're dealing with pipeline stories in a lot of the states that watch our show. Summit has one. There's other carbon pipelines. When the protests happen, or the community meetings in a community, and the person who has the biggest right of way for that pipeline to go through it does cause some animosity in town. Sure it does.

[Richardson] And you know, you don't you want to get what you hate to see is the government eminent domain, something through a farm, but they will do it. And what you need is somebody if you're a farmland owner, what you need is somebody that's lived that lived through that before and been the federal court and see what happens when you go to federal court and try to negotiate the best deal you can negotiate. And I'm telling you, if the government comes to you and says, Paul, we need to run a pipeline down the western edge of your farm, and we need 100 feet. And when we get through, we're uncovered back up, and you can keep farming, but we need an easement through there. And you say no, then then get ready. Because you're fixing to spend a whole bunch of money. And at the end of the day, I hate to say it, but what I've seen is you're gonna lose, they may move it, I may move it over here, there. But if I need to come right through the middle of your phone, you need somebody to help you negotiate the best deal you can get.

[Yeager] And I'm guessing running, you've been around enough of the country, I know, I have  seen the stop eminent domain signs are everywhere. They're not just they're not just on I 35 From my house six miles away. I've seen them in Arkansas, I've seen them in Oklahoma, it happens everywhere. And everybody kind of has that same response to it. When they're on the wrong side of it.

[Richardson] And I’m 100% on your team with that. It, you know, is it going to happen? It's not going to happen is ‘do I want it to’ Yes. And one time they were running pipelines through Mississippi. And of course, everybody, not everybody, but a lot of people end up in my office, what do I do? What do I do? What do I do? And I had two or three people say, Well, I'm gonna get a lawyer, and I'll take it all in federal court. Okay, well, I'm gonna go with you because I want to watch. And I want to learn what happens. And every one of them had the same joke. And the pipeline company would walk into the, into this office right here. And they would say, okay, Paul, we offered you, we had it appraised, and we offered $4,000 an acre, we'll give you $4,500 An acre for it right now. Today, if you don't take it, you're never gonna see me again. They've sit right at this table and said that very thing. It doesn't make no difference to me. But the offers 4500. And if you don't take it, good luck to you won't see me anymore. And they move along the land guys that buy these easements or facilitate these easements. And so I'm with you on eminent domain? I'm, I don't like it. But is it for the betterment of the country to have a pipeline from Canada to Gulfport, Mississippi maybe?

[Yeager] Is it, what? Yeah, and I'll again, I guess I didn't really mean to get us both in hot water. But I've seen you know, I mean, the pipelines go through and ask the people on the side of the rail line that exploded because of whatever product going through that could have gone through a pipeline, and then you hear their side of it, and they might have changed. And yes, and I know that I'll hear it from inside my office from people who were like that eminent domain is the worst thing and others will say, Yeah, but it was better for my community. So we could do a whole nother thing on that one and get us really in trouble. Ronnie, I'll leave it with this is the secret, you know, land as a good investment that used to be that we're not everybody knew that one. Everybody kind of knows that right now. Right? That land is still a pretty good investment.

[Richardson] You know, if you look historically, if you look at farmland, it may take up like in the 80s, it went way down, but it'll steadily tick up. And that seems to be for the last 40 years. 50 years. It's done that so is it a good hedge against inflation? I think so. Is it? Are you going to get as good a return cash on cash on a farm as you are on Amazon distribution center? Probably not. You know, but what is the appreciation gonna do if we could all peek into the future just a little bit, we'd all be rich, but you don't want to do that if it's kind of you gotta gotta feel what you like to invest in. You know, the, what I'm really passionate about, though, is if you do want to sell this farm, are you thinking about you're going to sell this? A phone call, somebody call a real estate professional now and let's start making a plan. It's not complicated to this 1031 business is not complicated. This DST trust business is not complicated. But I mean, you're talking about generational wealth, leaving it for your children, and you can do that and defer 100% of those taxes.

[Yeager] And you're talking about having that conversation. One, two, five years ahead, right. Five weeks,

[Richardson] Absolutely. Five years ahead, not the day before you close because the banks breathing down your neck because corn prices are low. That ain't the time to have that conversation. If it's if it's a year Two years, five years and you're thinking about it. Yeah, let's start looking around let's let you understand what the process is of what we're gonna do with the money when we get it you know when you're when you're when your parents don't have a lot of money and you're born in Yazoo County, Mississippi and you don't have any money, you know, ever you never think about it. I mean, all you think about what's going on. But you know, at one day you wake up and you got a loved one and you go golly, I wonder what to do with it. And you got to figure out where to put it. And that happens a lot to a guy that owns a section of land that he's been farming for 50 years. Quick story. We sold a man a guy in Texas. Out by Possum Kingdom Lake, he owned about 600 acres and lived in a house that had never had indoor plumbing. He's 85 years old. His basis is zero money in the land. And we sold it for $18 million. With DST the money. We put it in DSTS. So he started making about he started making about about $70,000 a month started coming to his mailbox in his checking account. And he said, he said I'm so excited. He said I'm gonna be able to get indoor plumbing in my house. And he ended up keeping about a half a section in his house got plumbing in his house. And he preserved that money and he's and it's right now it's invested in DSD. He's and he's making more money than he'll ever spend ever and he'll leave it all to his grandson. And so that's what makes you feel good about helping somebody like that and preserving that money because if he had had to pay capital gains tax on that guy late he would have owed, you know, five six $7 million of capital gains tax and and then what would you have done with the money put it in stock market now lose 20% In the first six months I'm just kidding about the stock.

[Yeager] If your phone would ring, yes because your phone would ring if that's where and what would happen and you hope your phone rings to say thank you but and I'm saying thank you for the time Ronnie.

[Richardson] You are quite welcome. If you need me, let me know.

[Yeager] Appreciate it. Ronnie. Thank you so much. Thank you and appreciate the time and feedback on the program itself. Or you just want to send an email not to me but to MarkettoMarket@IowaPBS.org. It's a pretty easy thing to do. Drop me a line about what you think, what you like, what you don't, what you want to see. We'll see you next Tuesday when another episode of this MtoM podcast is released. Bye bye